The issue of valuing instruments
for which no ready market exists is a challenge indeed. At a time when
pension funds are allocating billions of dollars to hedge funds,
private equity and venture capital pools, fiduciaries risk serious
fallout if they fail to establish solid ground rules
regarding valuation. There are any number of "must have" elements that
comprise effective policies and procedures. Ignore them and plan
sponsors lose a precious opportunity to detect possible trouble before
things get out of hand.

Now is not the time to take shortcuts
when it comes to valuing "hard to value" instruments or conducting
proper oversight of portfolio managers who trade relatively
illiquid stocks, bonds, derivatives and hybrids.